Daily Brief Financials: RHB Bank Bhd, Bitcoin, Princess Private Equity Holdin and more

• Of the six Malaysian banks screened, we keep RHB Bank and CIMB on the buy list; PB Bank and Maybank are quality but seem fully valued by comparison
• RHB Bank has, in the December quarter, maintained its improved its pre-provision profitability versus its peers; RHB’s high CET1 ratio understates its ROE, and it is attractive on PE multiples
• CIMB once again improved its positive post-provision returns which should support CIMB’s share price given its modest valuations and attractive PEG versus peers; its high NPL ratio is fully provisioned

• In 2020 and 2021, investors opted for TIPS over conventional bonds, yet over the past year, they have moved the other way.
• The TIPS ETF has fallen from $40bn of assets to $20bn, while the long bond ETF has doubled from $15bn to $30bn.
• The loud and clear message from this shift is that investors are woefully unprepared for an inflation shock.

During its Q422 results release, Princess Private Equity (PEY) announced the discontinuation of its foreign exchange (FX) hedging strategy from 1 April 2023 and an upsizing of its credit facility from €110m to €140m in response to the holding-level liquidity constraints it faced in late 2022. We believe investors should welcome these measures, as they facilitate PEY’s balance sheet management while allowing it to stay close to fully invested (investment level at 101.3% at end-January 2023) and to resume its dividend payments in line with the policy of paying out 5% of opening net asset value (NAV).